Meta Description:
Scams are always an interesting topic, no matter how bad they get. We are discussing the top three most famous Forex scams

The world is full of scams, and the Forex industry is no exception. How and why people fall for it can be very questionable, but in the end, everyone wants money quickly, and if you offer them a lot, they won’t think much about what’s behind it (until later, when they lost their actual money). Here are the most famous Forex scams – two of them happened in the US and third in South Africa. It all started with the Forex Ponzi scheme – twice. Let’s start chronologically.

Forex Ponzi Radio scheme (2003, Minnesota, US)

Advertising is a great and dangerous thing. One day in 2003, Minnesota citizens all over the state started hearing about currency investment – it was an advertisement devised by Trevor Cook. Cook was a money manager who went from sports betting guy to a multi-millionaire commodity trader. Via radio offered the opportunity of safe investments and annual returns that would be double-digit (at least). Thanks to a simple radio ad, the people of Minnesota invested $190 million in total. That’s how much they trusted Trevor Cook. What made this scam even worse is that Trevor invested some of the money, and the brokerage he worked with had grave problems with the Swiss regulators. The brokerage was Crown Forex SA, and it was speeding to bankruptcy. Trevor was fully aware of this, but he went with it and lost the money. Yes, while he invested parts of the fund he received, he kept most of the money for himself, which was discovered during the famous financial crisis in 2008. Trevor was imprisoned in 2010 and sentenced to 25 years in prison. He was 38 at the time. The clear example of a Forex Ponzi scheme couldn’t last.

Black Diamond Scam (2007, US)

Deanne Salazar and Keith Simmons started another Forex Ponzi scheme in 2007, using hedge funds. They weren’t the only ones working on the Black Diamond scam, and the “business” was operating smoothly for almost four years. They had over 300 customers invest in the Forex market. They promised their “customers” 4% monthly return (minimum) and sold them the story their company was more than successfully running for three years, so there shouldn’t be any problem with paying back the profits. Naturally, they said (what scammers say to this day) that there is always a possibility for withdrawal. They guaranteed that losses would be maintained in case they occur, at a maximum of 20%. Salazar and Simmons obtained 35 million dollars from their clients, but the scheme was revealed in 2010 because they never invested any of their client’s money they received. It could’ve been discovered any day, and we wondered how they thought they could get away with it. Simmons was sentenced in 2011 when CFTC received the case since investors filed a complaint. He had to pay a fine of $35 million, and he’s currently serving 40 years in prison. Of course, anyone who participated in the Black Diamond scam had to pay $76 million in total, and they were also arrested.

Colin Davids scam (2013, South Africa)

Platinum Forex was the name of the trading company Colin Davids was running almost eight years ago. He was offering, or more precisely claiming, an unrealistically high percentage of monthly returns to participants (84% and 48%). Despite the suspiciously high number, many South Africans decided to give it a shot and invest more than R100 million in total

Soon enough, FSB (the Financial Service Board found out Platinum Forex wasn’t licensed, nor did they have the right to provide any investment service. You can already assume Colin didn’t invest any of the money he got from his clients. He was more busy spending it for himself. To this day, this is the biggest Forex scam in South Africa.

In conclusion

Scams will always be present, so be sure if you want to become a trader to check the brokerage’s credibility. Nowadays, it’s easy to check broker reviews and go to websites that act as regulator bodies, meaning they have and update a list of licensed and certified brokers. God forbid something happens, there is always an option to report a forex scam, and regulators can usually refund you if you worked with a company on their list. Better safe than sorry!

Be Sociable, Share!